At some stage in your career, you may reach the point where your practice can no longer accommodate any new patients. For many dentists, the solution may be to open a second clinic.
While expanding your practice may be financially rewarding, there are several points you’ll want to consider ensuring that your second location is as successful as your first.
Here are five key questions to ask yourself
Why do you want to expand your practice?
Before undertaking any business expansion, it’s important to consider your motivation. Opening a second location may be a sound move if you’re experiencing a greater demand for dental services at your clinic than you can accommodate. But if you want it to be able to serve your same patient base, you need to find a second location that is near your existing practice. Alternatively, if you’re considering a location that’s further afield, you’ll need to do some local market research and create a business plan to find out if it’s reasonable to expect the same demand for services in your new location.
You might have to take on the additional managerial responsibilities of running a second practice. If you enjoy spending more time with your patients and are less keen on the management and operational elements of your practice, opening a second clinic may detract from the time you have to spend with your patients. Meeting with a Scotiabank Healthcare Specialist can help you by providing advice, considerations and financing options as well as connect you with the resources and professional contacts you need to make an informed decision.
How are you going to finance a second clinic?
Similar to when you opened your first dental practice, you must consider how you will finance a second location. Whether or not you plan to work out of that location can significantly impact your financing plan. “While you can get up to 100% financing to open an owner-operated practice, you may not be eligible for that level of financing if your second practice is an investment that you are not operating yourself,” says Sherveen Kamran, Senior Manager, Healthcare & Professional Specialist at Scotiabank. If so, you must consider if you have sufficient savings to cover the cost without taking on a level of debt that could strain your finances. If you are drawing from your savings or accumulated wealth, how will this affect your long-term financial plans, including retirement? Having a sound financial plan and reviewing it thoroughly and regularly can provide you with the reassurance you need to make your decision.
“The financial impact of owning two locations comes with additional complexities. It’s important to have the support of an experienced team, including a Healthcare Specialist who understands your profession and can advise on your practice financing, along with a lawyer and an accountant, who can provide the accounting and legal advice you need,” says Kamran.
Should you buy or lease your second location?
After doing some real estate research, you found the location for your second practice. Now you need to decide if should you buy or lease. Leasing means you won’t have to invest so much of your working capital, so you can use it to cover other set-up and operational expenses. However, you will likely have more restrictions on the kinds of physical changes you can make to the inside or outside of your building.
Buying a new property will give you more flexibility to renovate, however, as a building owner, you will be responsible for its upkeep and repair. This can be expensive and divert funds away from treating patients and managing the practice itself. Meeting with a professional can help you weigh the advantages and drawbacks of either decision. You can learn more about the options of buying or leasing commercial real estate by reading our article.
Are you willing to devote the extra time involved?
As a dental practice owner, you already know how much of a commitment it requires to run a successful practice. Along with ensuring you provide excellent dental care; you need to oversee your practice’s day-to-day operations. Before deciding to expand, consider how it might affect your work-life balance. For example, if you plan to work out of both locations, you need to consider the physical distance from one to the other as well as time spent at each practice. Are they within easy commuting distance? Will you schedule specific days where you work at each location?
While there are challenges with managing the additional time required, having a plan in place can help you stay on track and provide tremendous peace of mind. “Along with having an experienced team of advisors, it’s essential to have a strong office manager at each location,” says Kamran. You may also want to think about sharing the responsibility by establishing your second practice as a partnership. A partnership brings in an additional layer where, once again, you will want to get the right advice from your circle of professionals.
Will you be able to hire additional staff?
While the demand for dentists is expected to rise in the years ahead, it may be challenging to find sufficient staff. An analysis of the Canadian labour market indicates that during the period from 2019 to 2028, there could be as many as 12,000 job openings for dentists, but only about 7,000 professionals looking to fill them.1
Before you plan on expanding, it’s crucial that you find associates who fit well with your practice philosophy and have the kind of interpersonal skills you’re looking for. Commonly, repeat business comes from the office staff relationships with the patients. That way, you’ll be able to hit the ground running as soon as you open the doors to your second clinic.
While owning a second practice may be a great next move for you, map out all the benefits and drawbacks of expanding your practice and seek advice from your Healthcare Specialist and circle of advisors before moving ahead.
For customized advice and support to help you open a successful second practice, contact us today.